If a bad debt previously written off is subsequently repaid, the amount collected is recorded as an

Assessment: JAMB UTME - Principles of Accounts - 1994 Subject: Financial Accounting

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If a bad debt previously written off is subsequently repaid, the amount collected is recorded as an
Answer Details
If a bad debt previously written off is subsequently repaid, the amount collected is recorded as an income in the profit and loss account. This is because the bad debt written off was already recognized as an expense in the profit and loss account in the past, so when the debt is repaid, it is treated as a recovery of that expense and recorded as income. The amount collected is not recorded as an expense in the balance sheet, as the balance sheet only shows the financial position of a company at a specific point in time, and the collection of a bad debt is not an expense, but rather a source of income.
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